Housing Supply Needs More Public-private Collaboration, Less Red Tape

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Ontario's Progressive Conservative government has pledged to build at least 1.5 million new homes by 2031. The province passed five bills – Bill 108, Bill 109, Bill 23, Bill 97...
Canada Real Estate and Construction
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John Fox and Leor Margulies were recently interviewed and subsequently featured by Law Times discussing the intricacies of recent legislation impacting residential construction in the province.

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Ontario's Progressive Conservative government has pledged to build at least 1.5 million new homes by 2031. The province passed five bills – Bill 108, Bill 109, Bill 23, Bill 97, and Bill 134 – aimed at facilitating this new housing surge. And the Get it Done Act, 2024, a piece of omnibus legislation the province introduced on Feb. 20, includes proposed amendments to the official plans of some of Ontario's fastest-growing municipalities.

Law Times spoke with two lawyers at Robins Appleby LLP about how Queen's Park's efforts are helping or hindering residential construction.

John Fox is managing partner and co-lead of the firm's affordable and social housing group. He says that for too long, Ontario has focused on private sector delivery at the expense of non-profit and co-op housing. He predicts that Ontario meeting its goal of making housing more affordable will require a level of collaboration between the public and private sectors that the province has not seen in a long time.

Head of Robins Appleby's commercial real estate and development group, Leor Margulies, says the Greenbelt scandal has discredited much of the province's progress in fixing a system burdened by red tape, resistant municipalities, and many other factors. He says more incentives and tax breaks will help correct the supply crunch.

The suite of changes in Bills 108, 109, 23, 97, and 134 reflect a philosophy that the greater the housing supply, the lower the price will be, says Fox. He says the changes that will promote a faster delivery of housing through efficiencies in the planning system and cost-control measures, such as reductions in development charges, will help deliver affordability. However, he adds that these changes occur against a background of higher construction costs, higher interest rates, and labour shortages.

Fox says there is no direct link between passing a bill and creating more housing because all these factors must line up in the private sector's housing delivery.

Margulies says the strong resistance by municipalities to some efforts to streamline the approval process has been an unforeseen result of these pieces of legislation. For example, Bill 109 required municipalities to refund development application fees for zoning by-law amendments and site-plan applications if they failed to make a decision within a set deadline. Some municipalities responded by imposing more stringent requirements to submit the application, so more of the work was required on the front end. "So, it took even longer. Bill 109 really hasn't helped or forced the municipalities to move faster," he says.

Fox and Margulies say the most significant legislation is Bill 23, the More Homes Built Faster Act.

Bill 23 amended the Ontario Land Tribunal Act to expedite proceedings, prioritize certain cases, clarify the Tribunal's authority to dismiss appeals and order cost awards, and establish service standards, including timelines for completing specific stages of a case. The amendments give the Ontario Land Tribunal more ability to dismiss frivolous or unsubstantiated claims without hearings, says Margulies.

Bill 23 also eliminated the requirement that municipalities hold a public meeting when approving a draft plan of subdivision. But he says some municipalities have now required that additional pre-consultation meetings occur before the developer files the application – another example of municipalities resisting provincial efforts. "It's sort of like whack a mole. They were stymied at the back end. They now have it at the front end."

Bill 23 also proposed the removal of "upper-tier municipalities," such as Peel and Durham regions, from the Planning Act approval process for lower-tier official plans. Margulies says this will eliminate two-tier approvals, where two layers of government must assess and approve the same planning decision. The change to upper-tier municipalities is not yet in force. Some of Bill 23's amendments went into force upon Royal Assent, but not all.

Though Ontario has had a lot of housing creation, demand has outpaced it, says Fox. Since the 1980s, the provincial and federal governments have been largely absent in the creation of housing supply, and all the demand has relied on private delivery, he says.

"When we had had a successful housing market, there was both private delivery and non profit and cooperative housing being delivered in Ontario. My main issue with the legislation has been that there was not enough attention paid to that."

In 2017, the federal government announced Canada's 10-year National Housing Strategy. Ottawa and the Ontario government signed a bilateral agreement under the strategy in 2018. The agreement involves action plans, including boosting affordable and community housing supply, providing affordability supports, and protecting subsidized tenants, among many other initiatives.

"To deliver on that amount of below-market housing is going to require a level of collaboration between the public and private sectors, which we haven't seen in some time," says Fox. "I look forward to seeing that happen."

To boost housing supply and affordability, Margulies suggests further reductions in the harmonized sales tax (HST) for new projects. The province should also change how it assesses HST, he says. The tax was introduced in 1991 and only charged to houses above the average price of $400,000.

"It's still $400,000. It hasn't been indexed. The average cost in Toronto is $1.1 million. There's no question that it should be adjusted. The problem is, it's a huge revenue maker."

Margulies says the province should reduce the HST for first-time homebuyers or houses on the lower end of the price spectrum. He also believes the province should do more to incentivize non-profit and for-profit housing co-developments.

"There's all kinds of opportunities there," he says. "I know there has been some centres created, but that's an area that's open for substantial improvements."

Ultimately, Margulies says there is still too much red tape.

"Every government that has come in the last 20 years has always said they're going to cut red tape. All that's happened is they've added more red tape. If you look at the timeframes for approvals, they've all doubled over the last 10 years."

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